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Understanding the Corporate Sustainability Reporting Directive (CSRD)

Emma Valli

Marketing Coordinator

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Companies’ sustainability reporting will change in 2024 when the European Commission’s Corporate Sustainability Reporting Directive (CSRD) gradually comes into effect. The change aims to improve the quality and consistency of sustainability reporting by companies operating within the European Union (EU). The directive is an update to the existing Non-Financial Reporting Directive (NFRD) implemented in 2014.

The primary goal of the CSRD is to enhance the transparency and comparability of companies’ sustainability reporting. It aims to provide investors, stakeholders, and the public with reliable information on a company’s environmental, social, and governance (ESG) performance. The directive intends to facilitate sustainable investments, encourage responsible business practices, and promote the transition to a more sustainable economy. However, it is important to note that the directive and reporting standards specify what and how to report but do not regulate how companies should act on sustainability issues. Another directive called the Corporate Sustainability Due Diligence Directive (CSDDD) is being prepared to address that aspect.

Which companies does the CSRD apply to?

In the first phase in 2024, reporting obligations apply to listed companies employing over 500 people. They are required to publish their first reports in 2025 based on data from 2024.


Next, in 2025, the obligations expand to cover companies meeting at least two of the following criteria:

  • Average number of employees of at least 250 during the financial year
  • Net turnover of at least €50 million
  • Total assets of at least €25 million

By 2027, small and medium-sized listed companies will have to publish their first reports based on 2026 data. They are granted a three-year transitional period to allow for the collection of necessary data before fulfilling reporting obligations.

Non-EU companies with a turnover in the EU exceeding €150 million and having a subsidiary or branch within the EU must report on their 2028 activities in 2029.

It is also worth noting that reporting obligations cover Scope 3 emissions, which include emissions from a company’s entire value chain. This means that companies within the reporting scope will require emissions data from their value chain actors to meet their reporting requirements. Therefore, it is advisable for every company to prepare for emissions reporting.

What is reported and how?

Companies within the scope of the CSRD must report according to European Sustainability Reporting Standards (ESRS). These standards will be developed in line with existing sustainability reporting standards, frameworks, and initiatives such as GRI and SASB.

The standards assist companies in measuring and managing sustainability-related risks and developing their operations to become more sustainable. Sustainability reporting, previously known as responsible reporting, is divided into the following areas:

Environmental aspects, including:

  • Emissions from company operations and the value chain (Scope 1, 2, and 3)
  • Water usage
  • Measures to prevent harmful impacts on biodiversity and ecosystems
  • Amount and treatment of waste and by-products

Social aspects, including:

  • Workforce diversity
  • Human rights throughout the value chain
  • Measures to provide appropriate working conditions, health and safety, and address wage gaps
  • Prevention of negative impacts on communities, consumers, and end-users within the scope

Good governance, including:

  • Risk management and internal control
  • Ownership, independence, and supervision
  • Responsible business practices
  • Ethical guidelines for combating bribery and corruption

The CSRD requires companies to obtain external assurance on their corporate sustainability reports to increase the reliability of the reported information.

Sustainability information will be published in an open digital database, enabling transparent examination of company data and potentially reducing greenwashing. This is also aimed at improving the availability, comparability, and usability of reported information.

Data collection, management, and quality for sustainability reporting

Collecting, managing, and verifying required information demands resources from companies in terms of both time and tools. Data related to a company’s operations is often more easily accessible and verifiable, while value chain data can present more challenges.

The CSRD, for example, requires companies to calculate Scope 3 value chain emissions, accordingly with GHG Protocol. Additionally, companies need to identify the human rights impacts of individuals within the value chain and develop action plans to mitigate negative impacts.

Therefore, companies increasingly need information from value chain actors such as partners, subcontractors, and raw material suppliers. Data collection should be efficient, yet ensure quality and consistency. In certain situations, when primary data is unavailable, the standard allows the use of secondary data.

Now is the time to roll up your sleeves, invest in data collection processes and systems, and start collaborating with value chain actors to ensure high-quality data!


Read next:

📖 Guide to calculating emissions and carbon footprint
🥘 Reporting the climate impact of food is undergoing transformation.

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